If you’ve spent any time of late on the internet, watching cable news or attempting to tune out the unbearable caricature of a crypto bro your friend is still dating, for some reason, you know the following to be true: A recession is coming.
On the heels of surging inflation, wage increases have lagged behind rising costs of living and interest rates. Layoffs are abundant, with a chaotic labor market still finding its footing after The Great Resignation saw more than 50 million workers quit their jobs in 2022 alone. Economists clocked this from a mile away, of course, and started projecting that a recession would take hold in the fall of 2023. And if “the recession does not begin on schedule,” as Fortune wrote in December 2021, “it only means it has been postponed, not eliminated.”
So here we are now, with the fall of 2023 just months away and a probable recession creeping up like the Doomsday Clock. But something strange is happening within the U.S. economy: Americans are shopping like crazy.
You may be thinking, don’t consumers tend to reduce their spending during moments of fiscal turmoil? Right! Except for, well, right now.
Personal spending on goods and services rose 2.8% and 1.3%, respectively, in January, according to the U.S. Department of Commerce. Americans between the ages of 19 and 35, of whom there were nearly 70 million in 2021, are particularly big spenders, according to Fortune. A recent survey conducted by financial-software company Intuit found that nearly three in four Gen Zers “would rather have a better quality of life than extra money in the bank.”
Fashion is reaping the benefits. Take French luxury conglomerate Kering, which saw its reported revenue rise nearly 15%, exceeding $21.4 billion, during fiscal year 2022. Fashion itself may not be recession-proof, but consumers are certainly acting like it is.
“People will always care about how they look and how they express themselves,” says Jack Riewe, a fashion writer and designer who explored this phenomenon for GQ, in a piece called “How Recessions Drive Innovation in Fashion,” last summer. “As humans, that’s something nothing can take away — not even a terrible economy. I think in fashion, consumers will always find a way to get around not having money.”
As Riewe outlined last August, larger economic forces can trigger something of a “vibe shift” within personal style, and the brands and retailers that help shape it. Out of economically devastated France, for example, came Christian Dior‘s “New Look,” with tight waists and exaggerated busts signaling a return to pre-WWII-era femininity. “The 1980s brought bold neon colors, abstract prints and the emergence of hip-hop and punk fashion,” Riewe wrote in 2022, “while ‘indie sleaze’ emerged in the years following the economic crisis of 2008.”
In addition to vibe shifts, the recessions of America’s past also tended to foster greater economic equality. As Timothy Noah, a New Republic staff writer and author of “The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It,” wrote in May off 2022. “Recessions provided respite from growing income inequality because they tanked the financial markets where great wealth resided.” Meanwhile, those who do maintain their wealth may no longer wish to flaunt it. See: reports that, during the late-2000s recession, Hermés allowed self-conscious customers to sneak out of the store with generic shopping bags instead of its signature orange ones; and the this year’s “stealth wealth” trend.
Recent research, though, indicates that Covid-19 actually widened wealth gaps — not just in the U.S., but across the globe. The richest 10% of the world population now owns 76% of the wealth, according to the World Inequality Lab, with global economic inequalities now as extreme as they were at the peak of Western imperialism in the early 20th century.
“You see two big fashion markets emerging in this chapter of economics,” says Riewe. “One being the evil, world-dominating, fast-fashion federation and the other being the community-driven, renewable resale market — both born as high-fashion alternatives.”
Take the first camp: Despite plenty of negative media attention, the global fast-fashion market is growing — a lot, to the tune of a compound annual growth rate (CAGR) of 8.8% from 2021 to 2022. U.S. lawmakers may be urging the SEC to crack down on Shein over its labor practices, but the Chinese retail giant still saw nearly $23 billion in revenue last year.
Shein, which claims $64 billion-dollar valuation, was built on dirt-cheap clothes — a $7 pair of shoes here, a $10 dress there — that allow its shoppers to still indulge in “haul” culture without the financial burden. Increasingly controversial “buy now, pay later” platforms like Afterpay, Affirm and Klarna, meanwhile, allow shoppers to take out a loan for new clothes and repay it in four installments over several weeks.
Obviously, ethical concerns abound. If you’re not paying the costs, the old adage states, someone else is paying on your behalf. Which brings us to the booming secondhand clothing market, and the second of Riewe’s recession-proof sectors.
“Buying vintage equals resourcefulness and in-the-know, and fast fashion equals lazy and basic,” summarizes Riewe. “Nowadays, hipsters can wear vintage Prada and those not willing to pay for high-end can get similar-looking styles and still afford a vacation plane ticket.”
The numbers don’t lie: According to data provided by peer-to-peer e-commerce company Depop, 53% of consumers are increasingly turning to secondhand shopping on resale marketplaces as a way of saving money. And despite growing fiscal pressures over the last year, the platform is seeing young consumers buying more clothing now than they did last year — not wanting to compromise on purchasing the fashion items they love.
“There’s a big focus on value and affordability across our community,” says Steve Dool, Depop’s director of brand and marketing. “In times of economic downturn, shoppers may still desire a designer bag or vintage pair of sneakers, and buying it secondhand for a lesser price becomes a much more appealing alternative to buying it new at retail.”
Everything old is truly new again, even in the most upper-crust of high-fashion circles. Take the red carpet for last week’s Met Gala, where a bevy of Karl Lagerfeld‘s decades-old designs, throughout his tenures at Chanel, Fendi and Chloé, mingled with painstakingly custom couture creations straight from the most masterful of ateliers.
But resale spaces like Depop could contend with their own shifts and challenges. Riewe anticipates secondhand prices rising, which will ultimately give way to a different kind of customer base — i.e., folks willing to spend an arm and a leg on unique vintage pieces, “because that shows you have the monetary and cultural wherewithal to obtain it.”
Looking ahead, consumers can expect this economic weirdness to continue as we move through 2023. U.S. economists agree that this theoretical recession will begin later this year than they had initially forecast, thanks to this strikingly resilient economy of ours and a record-low 3.4% unemployment rate. In the meantime, we can take comfort in the fact that someone, somewhere, is leaving Hermès with a sparkly-new Kelly, disguised in a humble brown grocery bag.
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Source: Fashionista.com
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